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High-stakes decision on net neutrality looms for next FCC chairman

The next chairman of the Federal Communications Commission (FCC) could face a high-stakes and politically explosive decision.

If a federal court strikes down the commission's net neutrality rules, the next chairman will have to decide whether and how to try to reinstate them.

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The next chairman's response to a negative court ruling could spark a vicious fight with congressional Republicans on one hand, or leave the agency almost powerless to regulate modern technologies on the other.

The net neutrality rules were one of the defining achievements of the tenure of Chairman Julius Genachowski, who announced on Friday that he will step down in the next few weeks. The rules, enacted in late 2010 over the objections of Republican commissioners, require Internet service providers to treat traffic to all websites equally.

The purpose of the rules is to prevent Internet providers from speeding up access to websites that pay special fees or to their own sites. There is also concern that without the rules, Internet providers could slow down or block their competitors' sites. Supporters of the rules argue that all websites should be treated equally, whether they are large corporate services or small personal blogs.

Verizon has sued, claiming that the FCC overstepped its authority. If the court agrees with Verizon, it would not only scrap the regulations themselves, but also dramatically curb the FCC's ability to oversee the Internet.

Liberals and consumer advocates fear the FCC could become a neutered and outdated agency, unable to protect consumers in the modern marketplace.

"There's nothing that's more important to the agency than making sure it has the power to protect consumers and preserve competition when it comes to broadband," said Gigi Sohn, the president of consumer advocacy group Public Knowledge.

She noted that the D.C. Circuit Court of Appeals is expected to issue its decision on the rules later this year, likely not long after the next chairman is sworn in.

"Just as the new person is ascending to the [chairmanship], they're going to have to deal with does the agency have any ability to do anything important," Sohn said. "Nothing else matters, in my view."

She urged the FCC to reclassify broadband Internet as a "telecommunications service," which it has broad authority to regulate.

Although that move would put the rules on firmer legal ground, it would prompt a massive political backlash. Republican lawmakers have warned the FCC that they would fight any attempt to reclassify broadband.

They worry that reclassification would grant the FCC sweeping power to micromanage the business decisions of Internet companies and would strangle the growth of a vibrant industry.

But Sohn predicted that Senate Democrats would block any Republican attempt to overturn an FCC decision to reclassify broadband. She argued the next chairman should "take his lumps" on Capitol Hill and forge ahead with the reclassification plan.

In an interview on Friday, Genachowski said he is confident that the commission will defeat Verizon's challenge, noting that the same court recently sided with the FCC over data-roaming regulations.

"I think that we won the debate on whether to have an open Internet and whether the government has an appropriate role," Genachowski said, adding that he believes the regulations have spurred innovation and investment. He declined to comment about the potential for reclassification.

But most observers expect the court to strike down the rules, at least in part. Sohn noted the court could strike down regulations on wireline broadband companies while upholding regulations on cellphone service providers.

Berin Szoka, the president of libertarian think tank TechFreedom, said he hopes the next chairman abandons the fight over net neutrality.

"I am mystified why we have spent the last seven years arguing about net neutrality," Szoka said.

He argued that the Federal Trade Commission's existing authority to police anti-competitive and deceptive business practices is sufficient to address potential net neutrality abuses. He also argued that the courts might even reject the FCC's attempt to reclassify broadband as a telecommunications service.

"The fight over net neutrality is really only good for people who enjoy and get attention for talking about net neutrality and everyone else wants it to be over," Szoka said.

The president has narrowed his short-list of new FCC chairmen to only a few choices, according to people familiar with the process.

Potential candidates who could be saddled with the difficult decision over net neutrality include venture capitalist Tom Wheeler; Karen Kornbluh, ambassador to the Organization for Economic Cooperation and Development; and Larry Strickling, the head of the National Telecommunications and Information Administration.